Jyothy Labs Q1 Review – Material Cost Pressures Continue; Gaining Market Share: Motilal Oswal


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Jyothy Laboratories Ltd.’s Q1 FY23 revenue was in line with our estimate. Elevated commodity costs kept gross margin under pressure. The adverse impact was reflected in Ebitda margin, which stood at 10.2% (our estimate: 12.5%).

Revenue compound annual growth rate has been tepid at 5.5% over the preceding five years ended FY22. Revenue growth is the key for a company with sales of only ~Rs 22 billion.

The likelihood of a consistent 15% sales growth (essential for any re-rating) continues to appear difficult, despite Jyothy Labs’ efforts to ramp up its total and direct reach.

With margin likely to remain under pressure due to elevated material cost, its earnings growth prospects remain challenging.

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